Question

a single idea from Adam Smith or Karl Marx and explain how it is related to today's economy anywhere in the world. You might choose Smith's idea of the limited role of the government in the economy and explain whether it applies to modern governments. Or you might choose Marx's idea that capitalism presents a struggle between two classes.

Answer 1

Smith idea was of invisible hand where the private individual maximising their own interest lead to an efficient working the economy. In this case the role of government is very limited and market equilibrium is reached automatically in a free market where the individual are own interest maximiser. United States constitution have limited goverment, bound to specific principles and action by the government. The main functions of Limited government is the protection of people an their property. It levies just enough taxes to finance services related to these purposes, such as national defense or law enforcement. It stays out of other affairs involving consumer and producers. Wages, Education level, Retirement benefits are determined by the private individuals and not the government. The United States Constitution was written in 1787, the idea of a limited government is imposed by requiring the election of legislators by the people. It also segmented the federal government into three branches: legislative, judicial and executive. Both of these aspects effectively limit the power of the national government. Limited government works best in societies where private property rights are respected and contracts are enforced, ensuring a high degree of voluntary cooperation. People need property rights to determine resource ownership, cooperate with one another and plan for the future. People also need enforceable contracts to encourage trust, settle disputes, and protect and transfer property rights. Sociologists have also argued that ethnically and religiously homogeneous societies are best able to survive with limited government.The United States ranks 78th for its size of government, but ranks 16th in overall economic freedom, significantly lower than its third-place ranking throughout much of the 1980–2000 period. The United States ranks 8th in regulation, 27th for its legal system and property rights, 60th for international trade freedom, and 40th for sound money, leaving plenty of room for improvement. Measures of property rights and corruption have suffered in recent years under high levels of government regulation. At one time, the United States had the highest corporate tax rate in the developed world at 35%, but the 2018 Tax Cuts and Jobs Act reduced it to 21%, more in line with other major nations. However, public debt at more than 100% of GDP is a major problem, and government spending stands at 38% of GDP. However, gross national income per capita is over $58,800 – among the highest in the world. So, following the limited government intervention regime United States is doing well over the years.The limited role of government is applied in many other economies like Belgium, HongKong, Sweden ,Bangladesh.